Tuesday, December 3, 2013

Clarifying "non-profit" for my wife

From Wikipedia:
Nonprofit organization

A nonprofit organization ... is an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends...

Designation as a nonprofit does not mean that the organization does not intend to make a profit, but rather that the organization has no owners and that the funds realized in the operation of the organization will not be used to benefit any owners.

From Investopedia:
Definition of 'Not For Profit'

A not for profit organization is a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not for profit organization is used in pursuing the organization's objectives. Typically not for profit organizations are charities or other types of public service organizations. Generally, not for profit organizations can apply for a tax exempt status so that the organization is not subject to most forms of taxation...

Investopedia explains 'Not For Profit'

Except for the distinguishing feature that a not for profit organizations does not distribute profits to it owners, many non-profits have much in common with for-profit organizations. For example, while some not for profit organizations use only volunteer labor, any sufficiently large non-profit is likely to require a staff of paid full-time employees, managers, and directors. Indeed, since not for profit enterprises wish to accomplish their objectives in the same way as for profit enterprises, business tactics and management techniques honed in the for-profit world often work well in not for profit organizations as well.

Again, Investopedia:
Definition of 'Nonprofit Organization'

A business entity that is granted tax-exempt status by the Internal Revenue Service.

Investopedia explains 'Nonprofit Organization'

Nonprofit organizations don't pay income tax on the money they earn from fundraising activities or donations.

Finally, from Independent Sector:
What is a Nonprofit Organization?

There are many kinds of nonprofits -- the Internal Revenue Code defines more than 25 categories of organizations that are exempt from federal income taxes...

What separates a charitable organization from other types of tax-exempt organizations is its purpose: it must benefit the broad public interest, not just the interests of its members. It must serve one or more of the following purposes, which come from the IRS: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals...

Congress and state legislatures have long recognized this special service by making these organizations tax-exempt...

"Non-profit" does NOT mean they don't make money. It means they don't pay income tax on the money that they make.

No comments: